French authorities have conducted a raid on Netflix's (NFLX, Financial) offices in Paris and Amsterdam as part of an investigation into alleged tax-related offenses and undeclared labor issues from 2022. Netflix has expressed its cooperation with the French authorities, emphasizing its significant contributions to the local economy and its compliance with tax laws and regulations in the countries where it operates.
France is one of Netflix's largest markets in Europe. The investigation, which began two years ago, involves both French and Dutch authorities working together. According to reports from a 2023 French newspaper article, Netflix first came under scrutiny for its tax filings in 2019, 2020, and 2021. The attention was drawn when Netflix's French subsidiary was found to be utilizing a Dutch company—where Netflix's European headquarters is located—to reduce tax liabilities in France.
Reportedly, until 2021, Netflix's French operations were structured so that users were contracted with a Dutch subsidiary, allowing the company to pay less than 1 million euros in taxes in France for 2019 and 2020 despite having about 7 million French users. Following the termination of this agreement, Netflix France's revenue surged as it began accounting for subscribers in France rather than the Netherlands.
By 2022, Netflix reportedly generated approximately 1.3 billion euros in revenue from France, aligning with its 10 million users as of June 2023. It is important to note that the preliminary investigation into Netflix does not necessarily imply that criminal charges or a trial will follow.
